THE BOSTON GLOBE IS REPORTING

Pointing with concern to "red ink as far as the eye can see," President-elect Barack Obama pledged yesterday to tackle Social Security and Medicare as a central part of his effort to control federal spending and named a special watchdog to eliminate government waste - even as he campaigned anew to spend the largest pile of taxpayer money in history to revive the sinking economy.

The steepness of the fiscal mountain he will face was underscored by stunning new figures: an estimate that the federal budget deficit will reach $1.2 trillion this year, by far the biggest ever, even without his stimulus package.

The eye-popping estimates reflect plummeting tax revenues because of the recession and about $400 billion to bail out the financial industry and take over troubled mortgage lending giants Fannie Mae and Freddie Mac. The Congressional Budget Office estimate released yesterday also sees the economy shrinking by 2.2 percent this year and recovering only slightly in 2010, with the unemployment rate eclipsing 9 percent early next year unless the Obama administration steps in.

As he named Nancy Killefer, a veteran of the Clinton administration, as the new chief performance officer, Obama promised to scour the federal budget to eliminate what doesn't work and improve what does to "put government on the side of taxpayers." But he offered few details. (NOTE BIN READERS see this related story Obama Cuts Deal To Reduce Social Security, Medicare, Medicaid here)